The 38% increase in profit margins made by energy companies in the last two months is to be scrutinised by power regulator Ofgem, which today warned it could take action to ensure providers are "playing it straight" with consumers.

Ofgem, which regulates gas and electricity markets, found that the margin on a standard household dual-fuel tariff is now around £90, an increase of 38% from September. A standard dual tariff is the one charged to customers receiving both gas and electricity from the same supplier.

Alistair Buchanan, Ofgem's chief executive, said: "With Britain facing an investment bill of £20bn over the next 10 years, consumers have the right to expect that the energy retail market is providing them with value for money. Our analysis published today shows an increase in company margins from £65 to £90 at a time of rising energy prices, which causes Ofgem to rightly ask if companies are playing it straight with consumers."

Three of the big six energy supply companies – British Gas, Scottish & Southern Energy (SSE) and Scottish Power – have announced price rises for this winter and the margin figures published by Ofgem take these rises into account. Only one big six supplier – EDF Energy – has pledged to freeze prices between now and March 2011, while two others are yet to announce their pricing positions.

When SSE announced its price rises in October, to take effect from 1 December, it was the first of the big six suppliers to announce a price increase since 2008, when bills increased by a third in just one year.

"The energy retail market can only be fully effective if consumers have confidence that the market is transparent and easy to take part in. So, we will go beyond our usual quarterly reports on prices and do a comprehensive review of the retail market and our recent reforms from the consumers' perspective. We will also carry out a detailed investigation of the newly available retail accounts and the facts behind these numbers," said Buchanan. "Greater transparency in the market is good for consumers, investors and for the energy industry as a whole."

Citizens Advice welcomed the investigation, saying recent rises in energy prices are "terrifying" for people on low incomes. Director of public policy, Teresa Perchard, said: "We urge Ofgem to conclude this review swiftly for the sake of consumers, and for companies to cooperate with the regulator. We also urge any company that has been charging too much for their energy to reduce their energy prices and to refund any overcharges to consumers."

Ofgem's last major investigation into the retail market in October 2008 found no evidence of anti-competitive behaviour but found 4.3 million customers without gas who had no access to the best deals on offer from providers. However, Ofgem did implement new guidelines at the time to prevent unjustified price differences, set out new standards of conduct on the level of service for consumers and tougher rules on sales and marketing as well as new rules to allow more people who are in debt to switch supplier.

Audrey Gallacher, head of energy at Consumer Focus, said: "Transparency is the lifeblood of competitive markets; these arteries are pretty clogged up. This review must show us whether the energy market patient needs an information transfusion or major surgery."

Mark Todd, director of price comparison website Energyhelpline, added: "Most consumers do not need to pay as much as they do for their gas and electricity. They can cut their bills by switching to the cheapest online deals available, typically saving about £333 per customer. If everyone switched to their cheapest deal this would lead to a nationwide saving of £6.4bn and significantly dent suppliers' profits."

Comparison website uSwitch said there is now a £419 difference between the cheapest energy plan and most expensive in the market, with Scottish Power charging £1,357 a year for its standard duel fuel plan against First:Utility's online iSave V6 plan at £938 a year.

Gavin Hayes, general secretary of Compass, which supports a one-off windfall tax on energy companies, said energy giants are struggling with a different challenge – what to do with all their excessive profits. "Ofgem should now call on the government to impose a one-off levy on energy companies to claw back their excesses, plus recommend immediate price caps to regulate their oligopolistic and greedy behaviour."